Oil achieves 2% daily gain, but headed for third weekly decline

Oil prices rose by 2% on Friday due to speculators taking profits on short positions, but remained on track for a third week of losses due to slowing demand.

Brent futures rose by 2.0% to $81.58 a barrel, while U.S. West Texas Intermediate crude rose by 2.0% to $77.28. Both benchmarks were down about 4% for the week, the first time since May.

Concerns about demand have replaced the fear of production outages related to the Middle East conflict. Weak Chinese economic data this week has increased worries of faltering demand.

Refiners in China, the largest buyer of crude from Saudi Arabia, have asked for less supply for December. Euro zone inflation could tick up in coming months, but European Central Bank interest rates held at their current level could still get price growth back to 2%.

Higher rates can reduce oil demand by slowing economic growth. The US Federal Reserve Chair Jerome Powell is not confident interest rates are high enough yet to tame inflation. The next move by the Fed is a rate cut if the economy needs a helping hand in 2024.